Silver Market Update

The sharp advance by silver last week was presaged by the late July breakout
from the important "inner" downtrend that we had earlier delineated, which
had been in force from early March, as we can see on the 8-month chart for
silver shown below. So is that it - are we on our way now? - almost, but there
is one remaining major hurdle left to clear. Before going on to consider what
that is we should take note of the fact that silver is now critically overbought
short-term overbought as shown by its RSI indicator, and it has also run into
a still falling 200-day moving average, factors which point to a high probability
of it pausing to consolidate or perhaps react back somewhat in the immediate
future - if it does keep going higher near-term, the advance is likely to
be measured. The fact that the 50-day moving average is still some way below
the falling 200-day also suggests that some more time is needed before the
major uptrend expected gets into full swing.

On the 3-year chart we can immediately see the one remaining major hurdle
left for silver to clear before it takes off strongly higher, and that is
the important downtrend line in force from the highs of April - May of last
year. While it is expected to go on to vault above the resistance at this
trendline before much longer, especially as we are entering the most seasonally
bullish time of year for gold and silver, the current short-term overbought
condition suggests that it is going to take a rest before it attempts this
feat, in order for the overbought condition to unwind, and this pause is expected
to synchronize with a brief dollar rebound, for reasons set out in the parallel
Gold Market update. Aside from this caveat everything appears to be in place
for the major uptrend expected to get underway quite soon, and it is clear
that if silver does stage a clear breakout above its major downtrend line
it is likely to take off like a rocket. Fundamentally, we can look to politicians
to continue to play their part in the continued bullmarket in Precious Metals
by continuing doing what they do best, which is to create money out of thin
air, so that they can maintain their ongoing debt circus act.

Finally, I came across the following sound advice on a wall in a market in
Cancun, Mexico, a few days back. For the benefit of those of you who don't
understand Spanish, it reads "I buy gold and silver" - I thought "Yeah - me
too!"

The above represents the opinion and analysis of Mr. Maund,
based on data available to him, at the time of writing. Mr. Maunds opinions
are his own, and are not a recommendation or an offer to buy or sell securities.
No responsibility can be accepted for losses that may result as a consequence
of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation
of any kind from any groups, individuals or corporations mentioned in his reports.
As trading and investing in any financial markets may involve serious risk
of loss, Mr. Maund recommends that you consult with a qualified investment
advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction
and do your own due diligence and research when making any kind of a transaction
with financial ramifications.